The EUR/USD has climbed steadily through all of our trend lines, 1.40, and is currently trading just above May 22 highs. This is a very bullish move, and it appears the currency pair is on the verge of a near-term breakout to the upside.
With the EU finished for the week, investors will be paying close attention to U.S. equities and the release of Prelim GDP, Chicago PMI, and Revised Univ. of Mich. Consumer Sentiment. Should these data points beat analyst expectations and U.S. equities react positively this would only provide more fuel to the EUR/USD’s uptrend due to the strong positive correlation. In fact, the fundamental movements of the EUR/USD and the GBP/USD could be sending a message that U.S. equities are positioned for a breakout of their own. With economic data trending upwards around the globe, we are seeing a return to risk, which bodes well for the EUR/USD. We maintain our bullish outlook on the EUR/USD trend-wise due to the aforementioned reasons.
Fundamentally, we find resistances of 1.4078, 1.4117, 1.4187, 1.4222, and 1.4290. To the downside, we see supports of 1.4024, 1.3991, 1.3955, 1.3922, and 1.3889. The 1.35 area serves as a psychological cushion with 1.40 acting as a psychological barrier. The EUR/USD is currently exchanging at 1.4070.
